According to Liquidity-Preference Theory, If the Price Level Increases, How

question 113

Multiple Choice

According to liquidity-preference theory, if the price level increases, how do the equilibrium interest rate and the aggregate quantity of goods change?

• A) The interest rate and the quantity demanded rise.
• B) The interest rate rises and the quantity demanded falls.
• C) The interest rate falls and the quantity demanded rises.
• D) The interest rate and the quantity demanded fall.

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